“Streetlights? Why would we possibly want to buy our streetlights?”
First, some background: In 2010 I attended a workshop at the Massachusetts Municipal Association meeting. The workshop described how towns had purchased their municipal streetlights and saved hundreds of thousands of dollars a year on their town budget. The Department of Public Utilities (DPU) issued a rule that required utilities to sell streetlights to any municipality that was interested in purchasing them at a mutually agreed upon sales price. We sat down with our utility, WMECo at the time, and asked about the purchase of our streetlights. WMECo said the lights, poles and hangers were valued on their books at $475,000, so that was their offering price. The consultant that was advising the town, valued the system at $175,000. Negotiations began. During the negotiating process, WMECo included a provision that allowed them to restate the value of their municipal lighting systems in a rate increase request before the DPU. Shortly after the rate increase was approved WMECo informed us that the book value of Longmeadow’s street lights had increased to $745,000 and that was now their offering price. Same lights, just a different depreciation schedule, and the book value nearly doubled. Overnight, the benefit of purchasing street lights went from a sure-fire way to save the town money to at best, a break-even proposition. Buying our streetlights was no longer the financial sure thing, and the project was put on hold.
For several years, not much changed. Then the lighting revolution hit, and incandescent lights changed to fluorescent, and fluorescent to ultra-low energy LED’s. Towns that had municipal power programs began switching their lighting from mercury vapor, sodium vapor, or halide lights to LEDs to save money on their electric usage. But for towns like Longmeadow, there was no incentive to change to high efficiency lighting. Longmeadow paid for our streetlights according to a rate tariff. Because the power used to run street lights is not metered, the electric bill for these fixtures is based on the calendar. For example, during December, where there is an average of 15 hour of darkness, we get charged for the use of each bulb according to its wattage for all 15 hours of darkness. Even if the bulb is burned out, we’re still charged for the power. In June, that same bulb may cost us only nine hours of electricity each night. Bulb by bulb, our charges for electricity change with the seasons, but each bulb has a cost for each day of the year. Why weren’t towns switching to LED’s? First, because we didn’t own the fixtures, and Eversource wasn’t about to invest in Longmeadow’s street lights, and we weren’t about to invest in Eversource’s fixtures. Second, because there was no rate tariff for high efficiency bulbs, so even if we installed an 32 watt LED that provided the illumination of a 300 watt sodium vapor bulb, we’d be charged for usage of the 300 watt bulb.
The economics of street lights changed in 2018 when the DPU issued street light rate tariffs that included rates for high efficiency (LED) lighting. Now, the cost to run a 32 watt LED bulb is 10% of its corresponding 300 watt sodium vapor bulb. Same illumination, 1/10th the cost. With the adoption of a high efficiency lighting tariff it was time to take another look at our street lights. In addition to paying $157,600 per year in rental costs, we also pay $110,000 per year in electrical cost to light those streetlights, so the purchase of streetlights and their conversion to high efficiency LEDs gives us the opportunity to save both the rental cost and up to 90% of the operating costs – a total of up to $250,000 per year.
I’m a firm believer that the long term financial stability of Longmeadow includes new sources of revenue and eliminating unnecessary costs. Five years ago the town was renting a fiber optics line from Verizon as part of the town’s intranet (building-to-building) computer system. With the approval of Town Meeting, the money we were using to pay that lease was used to finance a loan that purchased and installed our own fiber optics system. By managing the payments on the loan, the town saved about 20% of the cost of renting from Verizon for the five year length of the loan, and are now saving all the money we once paid Verizon. It’s time to do the same thing for our street lights. The $750,000 cost to purchase our street lights can be paid through a 10 year loan at $80,000 per year. Adding in the cost of a maintenance contract, the payments are still short of the $127,000 per year in rental costs. And that’s BEFORE we begin saving on the electric bill.
Working with our town CFO, we’ve put together a financial plan under which the town would purchase our street lights. We’d bond the purchase and pay for the bond out of the budget line-item that pays for street lights. The plan is to save around 20% of the cost of street lights for the first few years, and then save 85% of the costs once the bonds are paid off. The 15% of the costs that remain are to provide upgraded lighting and a service contract to address ongoing maintenance. Our program has the town take advantage of grants (Green Community Grants) and incentives (some from Eversource) that assist municipalities in the conversion of their street-lights to high efficiency LED lighting. As part of our plan to further reduce the cost of our street-light conversion, I met with the Town of Agawam’s energy task force on November 13th to enlist additional communities in our plan, knowing that a larger purchasing group would reduce the cost of the conversion project. I am pleased to hear that Agawam (and now West Springfield) are planning to purchase their street lights and join Longmeadow in seeking bids to convert their streetlights to high efficiency LED systems.
Warrant article 15 at the May 14th Town Meeting seeks authorization to borrow $800,000 to purchase our street lights from Eversource. The financial impact of this project will have a positive long-term impact on the town and help hold down our taxes. Please feel free to contact me to answer any questions you may have about this warrant article.
I urge you to support this warrant article as the next step in fiscal control for the Longmeadow.
Mark Gold is the chair of the Longmeadow Select Board and can be reached at: email@example.com